Preliminary Report

INSTITUTE OF MANAGEMENT SCIENCES BAHAUDDIN ZAKARIYA UNIVERSITY MULTAN

Textile Industry Textile is a term that comes from “texture” which is a Latin word that means “to weave”. A clothis manufactured by weaving or knitting forms a fabric.

Textile Industry In Pakistan

The textile industry is one of the most important sectors of Pakistan. It contributessignificantly to the country’s GDP, exports as well as employment. It is, in fact, the backbone ofthe Pakistani economy.Established capacity The textile industry of Pakistan has a total established spinning capacity of 1550 millionkgs of yarn, weaving capacity of 4368 million square meters of fabric and finishing capacityof 4000 million square meters. The industry has a production capacity of 670 million unitsof garments, 400 million units of knitwear and 53 million kgs of towels The industry has a totalof 1221 units engaged in ginning and 442 units engaged in spinning. There are around 124 largeunits that undertake weaving and 425 small units. There area round 20600 power looms inoperation in the industry. The industry also houses around 10large finishing units and 625 smallunits. Pakistanï textile industry has about 50 large and 2500 small garment manufacturing units.Moreover, it also houses around 600 knitwear-producing units and 400 towel-producing units.Contribution to exports According to recent figures, the Pakistan textile industry contributes more than 60% tothe country’s total exports, which amounts to around 5.2 billion US dollars. The industrycontributes around 46% to the total output produced in the country. In Asia, Pakistan is the 8thlargest exporter of textile products.Contribution to GDP and employment The contribution of this industry to the total GDP is 8.5%. It provides employment to38% of the work force in the country, which amounts to a figure of 15 million. However,the proportion of skilled labor is very less as compared to that of unskilled labor.History Pakistan came into existence in 1947 at that time there were Only two textile millswith80,000 spindles and 3,000 looms only which were capable of producing 8% of the domesticdemand at that time. The organized development of cotton textile mills started in the late50’s.Pakistan industrial development corporation was formed in 1952 which started its operations in1953 with the inauguration of the Vatika Textile Mill at Karachi. By mid 60’sthere were about180 units of textile bleaching, printing and processing units, A number of spinning unitscomprising of only 12,500 spindles were set up. Newly established mills were based uponimported technology but there was lack of technical staff and shortage of capitals. By 1970-1971there was 113 textile units & the industry had 2,605 spindles and 30 thousands looms. After theseparation of East Pakistan , Cotton Export Corporation of Pakistan was established which meantthat most of the private sector was taken over by the state. The textile industry suffered heavylooses because the export cotton controlled by CEC , and the import of machinery was madedifficult due to shortages of foreign exchange. The 80’s decade brought a relief to the textile industry. There was a rapid growth inspinning sector. Till 1980-81 spinning continued to expand to 4033 thousand spindles in 203spinning units, and working capacity amounted to 2833 thousand spindles. Machinery forproducing garments and made-ups was also freed from import duty. As a result, a hugeexpansion in the spinning sector took place in the first five years of the 1990s. World demand forgood quality, wide width fabrics grew and replacement and a modernization process started.With these developments, production and export value-added items such as bed-sheets and homefurnishing started. Structural changes with the replacement of obsolete machinery andmodernization in the industry still continued in view of world competitionMain Products  Main Products of Pakistan Textile Industry are;  Cotton (Raw)  Yarn (Raw)  Fibre  Greige Fabric  Finished Fabric Apparel( Fashion wear and work wear)  Finished Fabric Made Ups  Garments (Suits,Shirts, Trousers of all sorts)  Undergarments  Bed sheets  Blankets  Quilts  Pillows  Curtains Topics 1) PESTEL Analysis 2) Porter Five Forces Model 3) Scenario Analysis 4) SWOT analysis

(1) PESTEL ANALYSIS

A PESTEL analysis is a framework or tool used by marketers to analyze and monitor

the macro-environmental factors that have an impact on an organization. The result of which isused to identify threats and weaknesses which is used in a SWOT analysis.Political Factors These are all about how and to what degree a government intervenes in the economy.This can include – government policy, political stability or instability in overseas markets,foreign trade policy, tax policy, labor law, environmental law, trade restrictions and so on.Economic Factors Economic factors have a significant impact on how an organization does business andalso how profitable they are. Factors include – economic growth, interest rates, exchange rates,inflation, disposable income of consumers and businesses and so on.

Social Factors Also known as socio-cultural factors, are the areas that involve the shared belief andattitudes of the population. These factors include – population growth, age distribution, healthconsciousness, career attitudes and so on. These factors are of particular interest as they have adirect effect on how marketers understand customers and what drives them.Technological Factors We all know how fast the technological landscape changes and how this impacts the waywe market our products. Technological factors affect marketing and the management thereof inthree distinct ways:  New ways of producing goods and services  New ways of distributing goods and services  New ways of communicating with target marketEnvironmental Factors These factors have only really come to the forefront in the last fifteen years or so. Theyhave become important due to the increasing scarcity of raw materials, pollution targets, doingbusiness as an ethical and sustainable company, carbon footprint targets set by governments (thisis a good example were one factor could be classes as political and environmental at the sametime).Legal Factors Legal factors include - health and safety, equal opportunities, advertising standards,consumer rights and laws, product labeling and product safety. It is clear that companies need toknow what is and what is not legal in order to trade successfully. If an organization tradesglobally this becomes a very tricky area to get right as each country has its own set of rules andregulations. (2) Porter Five Forces Model Porter recognized that organizations likely keep a close watch on their rivals, but heencouraged them to look beyond the actions of their competitors and examine what other factorscould impact the business environment. He identified five forces that make up the competitiveenvironment, and which can erode your profitability. These are: 1. Competitive Rivalry; This looks at the number and strength of your competitors. How many rivals do you have? Who are they, and how does the quality of their products and services compare with yours? Where rivalry is intense, companies can attract customers with aggressive price cuts and high-impact marketing campaigns. Also, in markets with lots of rivals, your suppliers and buyers can go elsewhere if they feel that they're not getting a good deal from you. On the other hand, where competitive rivalry is minimal, and no one else is doing what you do, then you'll likely have tremendous strength and healthy profits. 2. Supplier Power; This is determined by how easy it is for your suppliers to increase their prices. How many potential suppliers do you have? How unique is the product or service that they provide, and how expensive would it be to switch from one supplier to another? The more you have to choose from, the easier it will be to switch to a cheaper alternative. But the fewer suppliers there are, and the more you need their help, the stronger their position and their ability to charge you more. That can impact your profit. 3. Buyer Power.; Here, you ask yourself how easy it is for buyers to drive your prices down. How many buyers are there, and how big are their orders? How much would it cost them to switch from your products and services to those of a rival? Are your buyers strong enough to dictate terms to you? When you deal with only a few savvy customers, they have more power, but your power increases if you have many customers. 4. Threat of Substitution; This refers to the likelihood of your customers finding a different way of doing what you do. For example, if you supply a unique software product that automates an important process, people may substitute it by doing the process manually or by outsourcing it. A substitution that is easy and cheap to make can weaken your position and threaten your profitability. 5. Threat of New Entry.; Your position can be affected by people's ability to enter your market. So, think about how easily this could be done. How easy is it to get a foothold in your industry or market? How much would it cost, and how tightly is your sector regulated? (3)Scenario Analysis

A technique that develops plausible alternative views of how the environment might develop in the future. Scenario planners usually avoid presenting alternatives in terms of finely calculated probabilities. Scenarios tend to extend too far into the future to allow probability calculations and besides, assigning probabilities directs attention to the most likely scenario rather than to the whole range.DEFINE OBJECTIVE AND SCOPE •Define the issues, decisions or key variables to be evaluated • Set the scope of study, including the time horizon to be considered • Agree on approach, select team members and secure senior management commitmentDEFINE KEY DRIVERS • Identify key external drivers that are likely to influence scenarios • Define the major internal variables that need to be addressed • Establish critical relationships between driversCOLLECT AND ANALYZE DATA • Collect quantitative, qualitative and expert opinion data • Assess the predictability and impact of the key drivers • Define appropriate measures for the key driversDEVELOP SCENARIOS • Construct scenarios and develop a narrative description for each • Test the scenarios using the data collected • Update scenarios and set criteria for evaluating strategies and plansAPPLY SCENARIOS • Test sensitivity of strategies and plans under each scenario • Formulate contingency plans and risk mitigation strategies • Communicate to all constituenciesMAINTAIN AND UPDATE • Integrate leading indicators and key performance metrics • Refresh the data and update scenarios as appropriate over time • Repeat as needed (4)SWOT Analysis

Strengths Strengths describe the positive attributes  What makes you unique in your competitors?  What advantages do you have over your competition?  What do you do better than anyone else?Weaknesses Weaknesses are aspects of your business that detract from the value you offer or placeyou at a competitive disadvantage.  Does your business have limited resources?  What could you improve?  What should you avoid?  What factors lose you sales?Opportunities Opportunities are external attractive factors that represent reasons your business islikely to prosper.  What good opportunities can you spot?  What interesting trends are you aware of?  Changes in technology and markets on both a broad and narrow scale.  Changes in government policy related to your field.Threats Threats include external factors beyond your control that could place your strategy, orthe business itself, at risk. You have no control over these, but you may benefit by havingcontingency plans to address them if they should occur.